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CEO Larry Page calls the deal “extremely important” as Web usage on mobile devices continues to rise, and the firm said its biggest acquisition ever will “supercharge the Android ecosystem and will enhance competition in mobile computing.”

NEW YORK – With more consumers going online via their mobile devices, Internet giant Google said Monday that it has agreed to buy mobile handset maker Motorola Mobility, a partner in Google’s mobile operating system Android, for $12.5 billion. It is the company's biggest deal ever.

Some observers immediately suggested that Google seemed to be taking a page from Apple's playbook by taking control of hardware devices. "Google sees the need to arm itself with its own in-house device brand to compete effectively with Apple and create an iconic device line like the iPhone," said Sharon Armbrust, senior analyst at SNL Kagan.

“The acquisition of Motorola Mobility, a dedicated Android partner, will enable Google to supercharge the Android ecosystem and will enhance competition in mobile computing,” Google said in a statement.

On a conference call, Google CEO Larry Page called the deal “extremely important” event in Google’s evolution. Apple, smartphone makers and others are likely to keep a close eye on the acquisition and its effects.

Activist investor Carl Icahn, who also owns stakes in the likes of Lionsgate, is an investor in Motorola Mobility, holding a stake of more than 11 percent. He had pushed the company to pursue a deal. "This is a great outcome for all shareholders of Motorola Mobility, especially in light of today's markets," Icahn said in a statement on Monday.

The price of $40 per share that Google said it would pay in the transaction represents a 63 percent premium to Motorola’s closing price on Friday. Management said that the deal will be mildly accretive when excluding amortization effects.

“Motorola Mobility’s total commitment to Android has created a natural fit for our two companies,” Page said in a statement. “Together, we will create amazing user experiences that supercharge the entire Android ecosystem for the benefit of consumers, partners and developers. I look forward to welcoming Motorolans to our family of Googlers.”

Andy Rubin, senior vp of mobile at Google, said: “We expect that this combination will enable us to break new ground for the Android ecosystem. However, our vision for Android is unchanged and Google remains firmly committed to Android as an open platform and a vibrant open source community. “

The transaction is expected to close by the end of 2011 or early 2012. Despite regulatory scrutiny that Google has been under, management said it expects to win approval for the transaction.